Whose IPO Is It Anyway?

Whose IPO Is It Anyway?
The CNX Nifty Logo is Displayed on a Glass Facade at the NSE in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

India Inc. has raised the most money via initial public offerings, so far this fiscal, than in the last six years. But existing shareholders, rather than the companies themselves, have benefited the most from the windfall.

Of the Rs 22,486 crore raised from initial share sales this fiscal, 66 percent has been in the form of offers for sale, while fresh issue of shares made up the remaining 34 percent.

When companies raise funds via the offer for sale route, the proceeds are used to pay existing shareholders who are looking to dilute their holding or exit the firm.

On the other hand, when a company issues fresh shares, the proceeds can be used as capital investment to grow the company.

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